Equipment Rental Insurance

Whether you rent out video equipment, party supplies, or gardening tools, your business has undertaken a sizable investment. The cost of repairing or replacing this equipment from your business's savings after a disaster could cause serious harm and even potential bankruptcy. Having the right equipment rental insurance to protect your business's investment is critical.

Fortunately, independent insurance agents can walk you through a hand-picked selection of top insurance policies to cover your business and your employees. They'll get you matched to the ideal amount of coverage for your unique company and its operations. But first, here's a closer look at equipment rental insurance, what it covers, and why it's necessary.

What Is Equipment Rental Insurance?

Also called rental coverage insurance or equipment insurance, equipment rental insurance is a specialized type of coverage designed to protect equipment, tools, and inventory that businesses rent out to clients, customers, other businesses, venues, etc.

Covered equipment can range from construction equipment to party supplies, silverware, and recording equipment. As a business owner, this coverage can help you avoid hefty financial losses in case of accidents, equipment breakdowns, and other mishaps that occur on your premises or at rental locations.

Equipment insurance can include inland marine policies and general liability coverage for protection against potential damage or loss to property that's in transit and expenses related to various lawsuits.

What Does Equipment Rental Insurance Cover?

There are several coverage options for equipment rental businesses. For starters, you’ll need several basic business insurance policies and insurance solutions, such as:

General liability insurance: Provides coverage in case of claims that you or your staff members caused bodily injury or property damage to others.
Commercial property insurance: Covers incidents of damage, destruction, loss, vandalism, etc., to your company property, including buildings, tools, rental equipment, and inventory.
Commercial vehicle insurance: Your policy will need to include auto liability to cover both bodily injury and property damage for you and all employees who drive on the job.
Workers' compensation insurance: This provides financial compensation to your employees due to work-related injuries or illnesses.
Umbrella insurance: Also known as excess liability insurance, this coverage can extend your existing liability coverage limits to increments of $1 million to help protect against extremely costly lawsuits.

As an equipment rental company, you need several additional types of coverage to manage your risks. An independent insurance agent can help assess your risks and provide a complete rental insurance package.

Additional Rental Equipment Coverage for Businesses

You have risks regarding your rental equipment in two areas major areas. The equipment can be lost or damaged while in your possession or the customer’s, or the equipment can cause bodily injury or property damage to third parties, including customers renting from your business.

To adequately protect your tools, machinery, and other rental items, you may also need the following coverage:

Inland marine insurance: Covers your business's equipment against theft, vandalism, damage, and destruction, including while it's in transit, regardless of who’s handling it. Mobile equipment insurance is typically covered under inland marine policies.
Rental agreements: To create this agreement, you’ll need to work with your attorney. Your attorney will draft a rental agreement that clearly states responsibility for the loss or damage of any rental items and liability claims related to their use.

Note that no matter how much responsibility the agreement transfers to the renting customer, you must also fully insure your business to protect against unforeseen losses and expenses arising from a number of threats. Equipment rental insurance is often available on a day-to-day basis, so customers can get coverage for only the duration in which they need it.

Important Rental Business Insurance Considerations

The rental agreement your customer signs should assign responsibility to the customer for the loss or damage of rental items and bodily injury or property damage liability resulting from the use of the rental item. However, you have some responsibility as an equipment rental business.

Take the following into consideration:

If you rent a construction crane to someone who has no idea how to use it, you could still be found responsible if the customer causes an accident. While your insurance may protect you, the insurance company may not continue your coverage going forward.
Some equipment should only be rented to operators or contractors, and other types of equipment should require training before being released to the customer.
You should have a clear understanding with your insurance carrier about any rules or restrictions concerning the rental of potentially dangerous or hazardous equipment.
If you rent out high-value equipment or rent out equipment for a long period of time, insist that the customer purchase a policy on the equipment and/or a liability policy to cover its use. You can ask that you be an additional named insured on that policy. Additionally, get a certificate of insurance as evidence that the requirement has been met. This will provide you with the best protection against having to make a claim on your own policy.

Your rental business insurance policy is an asset of your business, and possibly the most valuable. Protect your business further by using common sense regarding what type of equipment you rent out to whom.

What Is a Liability Damage Waiver?

Equipment rental companies sometimes allow a renter to complete a liability damage waiver instead of being insured. This is an alternative to equipment rental insurance and provides limited coverage when compared to an actual insurance policy.

Liability damage waivers can cover rented equipment against theft, fire damage, lightning damage, flooding, and other acts of nature. These waivers don't include protection against accidental damage or losses, though.

If a customer won't complete a liability damage waiver, the equipment rental company typically requires them to provide proof of insurance before they're able to rent any equipment.

What's Not Covered by Equipment Rental Insurance?

Equipment rental insurance comes with various exclusions you must also be aware of. Don't expect your equipment rental insurance to cover any of the following:

Damage caused by abusing the rented equipment
Normal wear and tear to equipment
Damage caused by unauthorized parties
Damage caused by hazardous materials
Maintenance costs and damage resulting from inadequate or improper maintenance

Review your specific equipment rental insurance policy to determine what's not covered, so you can avoid filing claims that are likely to be denied.

How Much Does Equipment Rental Insurance Cost?

The cost of equipment rental insurance can vary based on several factors. Your equipment rental insurance cost can be impacted by the following:

The location of your business
The duration of the rental
The type and value of the rented equipment
Prior claims history

An independent insurance agent can help you find affordable equipment rental insurance near you.

An Independent Insurance Agent Can Help You Find Equipment Rental Insurance

Independent insurance agents excel at matching the most appropriate policy to the business in need. Like a broker, an independent insurance agent works for you, not the insurance company.

These agents are free to shop and compare quotes from multiple carriers to help you find the best deal. And down the road, your agent will still be there to help you file claims or update your coverage as necessary.

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